How much “is owed” is a misnomer.....there is no longer any debt on the property and they “owes/owed $2k on a $400k peoperty” is likely bogus.If this person Truly does have access and can submit offers, the bank will be looking for proof that you as the buyer can actually buy.  

It eats into cash flow, we may have difficulty saving for our next down payment,, and I am worried that the large mortgage will affect our debt to income ratio when we apply for a loan for our next property.I am also concerned about paying too much for the property as there are no solid comps in the area. 

Three good steps are to 1) buy for cash flow, not appreciation, 2) secure debt that is longer in term than your projected hold period, 3) have adequate upfront reserves.

When I took possession of the property I atomatically raised rents 20%.

Therefore instead of expanding our portfolio to increase cash flow we are looking at reducing debt to increase cash flow. 

My wife and I own our home, and are using 2019 to get out of consumer debt and I am working to learn what I can about real estate investing.I am a voice systems engineer for a financial institution.Maybe with confidence and time trying wholesaling or flipping would be in the realm of possibility. 

The bank will only give you a loan if your debt divided by your income is under XX%.

So you have a job and I'm going to assume you don't have allot of debt so you should qualify for some first time home owner stuff. 

We currently don't have any debt so we have room to work I'm NYC has some ways to make this deal harder than it looks so please share any Pros and Cons you're aware of. 

would that protect our assets any differently when I pass away and I were to leave a ton of debt in either of our name?